Ontario’s once-in-a generation opportunity to modernize and decarbonize our electricity grid

Electricity decision-making in Ontario is at an urgent juncture, with demand set to rise by 62% by 2035 to support economy-wide electrification. The balancing act of meeting system reliability, affordability, and climate commitments is a complicated challenge, and has impacts far beyond the meter. 

TAF recently commissioned Power Advisory LLC to model three potential scenarios for Ontario’s electricity system to achieve net zero by 2035. The study finds that there are multiple cost-effective pathways to reliably meet rising demand and significantly limit our reliance on gas-fired generation. In doing so, we can also empower communities across the province to have more control of their energy system. For the full findings of the report, see here.  

Over a year ago, we started exploring opportunities to decarbonize Ontario’s grid while examining how it would impact various communities. TAF’s urban mandate keeps our focus on helping cities reach their net-zero targets, but we also wanted to “expand the tent” beyond our usual allies to better understand the challenges and opportunities of the system from different vantage points. We sought advice from large businesses and heard from those who haven’t always had a voice at the table, like rural representatives, Indigenous energy players, and equity-deserving groups.   

What we learned is that modern grid design should prioritize transparency and public participation. That means inviting in new players and technologies to improve system function and services. We know that affordability is a key but complex issue requiring careful examination of systemic inequities that go beyond electricity rates. It’s not just about reducing the impacts of using fossil fuels, but also about creating a flexible, resilient, community-friendly approach that reduces reliance on large, centralized facilities and increases capacity for businesses and homeowners to generate and use their own electricity. 

We also heard that the politics of our electricity system is a big turn-off, and that the complexity and lack of transparency in the decision-making process is making it harder for voters to advocate for changes and hold government accountable. 

Ontario is rightly proud to be one of the cleanest electricity systems in North America with a grid that is 91% fossil-free. Ontario’s “clean grid advantage” helped attract business and talent from around the world and, if maintained, would position the province to thrive through the global transition to a net-zero economy.   

However, to meet rapidly growing electricity demands, Ontario is currently ignoring many of the viable options, contemplating a path that would expand the use of fossil fuels to meet electricity demand and increase grid emissions by 260% by 2040. This path is not only more costly, but also short-sighted, missing out on opportunities to modernize the grid and create broader public benefits. 

In their report, Power Advisory explored three alternative pathways to meeting our rising electricity demand while achieving a net-zero grid. They grounded their analysis in Ontario’s existing policy and regulatory environment and the current state of our grid, with the goal of reducing carbon emissions to a minimum and supporting the electrification of our buildings, vehicles, and industry. The research demonstrates that Ontario has a once-in-a-generation opportunity to build a reliable, affordable, electricity system aligned with the global transition to net zero. In fact, such a system would cost Ontarians less and serve them better, increasing regional flexibility and autonomy.  

All three pathways modelled by Power Advisory confine gas-fired generators to a limited role, to be used for less than 3% of overall generation and only when demand absolutely necessitates it. All scenarios also show an urgent need for at-scale investments in energy efficiency, wind, solar, storage, and transmission—the primary building blocks of a modern, 21st-century electricity grid and, designed correctly, a source of multiple community benefits. These could include local economic opportunities associated with distributed energy resources, increased system reliability, and retention and attraction of major businesses seeking to achieve their own low-carbon targets. It can also reduce energy costs for tenants, small and medium-sized enterprises, and homeowners. 

In addition, we can imagine taking their scenarios further – to expand the role of grid interties, for example, to access clean power and create synergies with neighbouring jurisdictions, or to consider a steeper decline in the cost of solar, wind and storage equipment, or with a greater emphasis on conservation and demand side management, which could open the door to even more ambitious pathways to net-zero. 

However, to grasp this opportunity, Ontario needs to act now because the longer we wait, the more costly and difficult it will be.   

Our six recommendations informed by findings from the Power Advisory report: 

1. Eliminate energy waste to offset demand growth. Ontario is well behind many other North American jurisdictions in energy efficiency, an approach that improves health outcomes and avoids over-building of generation assets. Building envelope upgrades, high-efficiency appliances, and modern HVAC systems are immediate opportunities. Reducing just 11% of expected demand by 2035 can eliminate the need for incremental buildouts of wind, solar, and storage by almost half. We can also target and resolve existing grid congestion. 
2. Invest in clean, low-cost renewables and storage. Wind and solar are proven technologies that comprised 75% of new installed capacity globally in 2021. Their costs have dropped by 72% and 90% since 2009. When paired with investments in storage, renewables can reliably make up 26 to 35% of our total energy supply by 2035 and limit exposure to external market and geopolitical forces. Renewables and storage will also further benefit from the recently announced federal refundable tax credit, equivalent to 30% of the capital cost of investment and expected to come in to effect next spring. 
3. Unlock the potential of distributed energy resources (DERs). A recent study commissioned by the Ontario Independent Electricity System Operator shows that DERs have tremendous potential to meet our incremental system needs. Resources like rooftop solar and storage can be deployed quickly to alleviate our overloaded transmission system and help stem increased reliance on gas-fired generation in the near-term. The availability of flexible demand-side resources, in combination with smart technology, are projected to rapidly scale as we electrify our building, transportation, and industrial sectors. 
4. Prioritize innovation over politics. Our existing capacity and energy markets are partial to fossil fuels. In combination with the politicization of our energy systems, this has led decision-makers to prioritize old technologies while ignoring proven, affordable non-emitting solutions. We need to empower local governments and communities to make their own electricity decisions to maximize local benefits. 
5. Start investing in critical transmission and distribution. It is inevitable that we will need to invest billions of dollars in transmission and distribution over the next two decades to modernize our electricity grid. These critical projects take time and require coordination and consultation with multiple parties. Done right, they can distribute the economic benefits of clean projects to local communities across Ontario and help minimize the power disruption impacts of extreme weather events. 
6. Stop investing in short-sighted solutions. It is more expensive to meet rising demand with natural gas than to use a mix of energy efficiency, wind, solar, and storage. We shouldn’t be building more gas-fired capacity, and we need to turn the dial down on our existing gas plants as soon as possible. Otherwise, we risk being saddled with stranded assets out of step with upcoming federal Clean Electricity Regulations. 

The future electricity grid could empower residents and businesses to benefit from the system, through energy efficiency, load management, and community ownership. We need to get moving to enable an affordable, reliable, and clean electricity grid by 2035 or sooner. As the Power Advisory report demonstrates, this future system is possible, cost-effective, and can distribute economic and social benefits to communities across Ontario. 

Are you interested in working with TAF to broaden the dialogue on electricity system decision-making to help ensure the best outcomes for all Ontarians? Opt-in to join a future conversation. 

Read the full report, Scenarios for a Net-Zero Electricity System in Ontario